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Koo Yun-cheol, Deputy Prime Minister and Minister of Economy and Finance. (Photo = Yonhap News Agency) |
[Alpha Biz= Kim Jisun] South Korea is set to unveil a plan to establish a Korean-style sovereign wealth fund as early as June, with a focus on investing in late-stage startups and strategic industries such as artificial intelligence (AI) and semiconductors, according to an exclusive report by Maeil Business Newspaper.
The Ministry of Economy and Finance is finalizing the “Operational Framework for a Korean Sovereign Wealth Fund,” with accounting and legal reviews currently underway by Samil PwC and Kim & Chang.
The proposed fund will be financed through government-held stakes in major policy banks, including Korea Development Bank and Export-Import Bank of Korea. Dividends generated by these institutions will serve as a recurring funding source for startup investments.
As of late February, the government holds a 100% stake in Korea Development Bank and a 76.79% stake in the Export-Import Bank of Korea. If roughly half of these holdings are contributed to the fund, total assets could reach around KRW 20 trillion, with annual dividend inflows potentially adding up to KRW 1 trillion.
The fund is expected to prioritize investments in startups at Series B stage or beyond—companies that have already validated their business models and are entering expansion or scale-up phases. A senior government official noted that early-stage investment is already covered by existing funds, making a focus on later-stage firms more appropriate to avoid overlap.
Vice Prime Minister and Finance Minister Koo Yun-cheol has reportedly emphasized expanding equity investments in innovative companies, calling for a more proactive state role as a strategic investor.
The fund is expected to build a diversified portfolio across emerging industries, including AI, AI semiconductors, physical AI, next-generation NPUs, robotics semiconductors, and biotechnology.
This approach will distinguish the new fund from Korea Investment Corporation (KIC), which primarily manages foreign exchange reserves with a conservative investment strategy. The new sovereign wealth fund, by contrast, will pursue more aggressive and active investments in domestic strategic industries—similar to the division of roles between Singapore’s GIC and Temasek Holdings.
In addition, South Korea is expected to establish a trilateral investment framework comprising KIC, the new sovereign wealth fund, and a planned Korea-U.S. joint investment vehicle, tentatively named the Korea-U.S. Investment Corporation, which is scheduled to launch on June 18.
The initiative reflects a broader policy objective that the success of innovative companies should benefit the broader public. By linking sovereign capital with startup investments, the government aims to secure long-term funding sources for future generations while strengthening national competitiveness in key industries.
Global precedents also underscore this strategy. The U.S. government reportedly acquired a roughly 10% stake in Intel in exchange for semiconductor subsidies, later benefiting from significant valuation gains amid the AI boom. Similarly, Japan has invested JPY 250 billion in Rapidus, alongside major corporations such as Toyota, Sony, and SoftBank, creating a structure that allows future returns to be redistributed to the public through dividends or equity gains.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
